Guidelines for Calculating Carbon Footprint for Businesses in Vietnam
Vietnam has clear guidelines for businesses to effectively calculate and report the carbon footprint of their products. The country’s Ministry of Science and Technology officially adopted ISO standards in 2020, which supports its efforts to meet net zero carbon emissions goals. Overall, the standardized approach enables businesses in Vietnam to align with global best practices for industrial and commercial development. We discuss the standard guidelines and compliance requirements.
In 2020, the Directorate of Standards, Metrology, and Quality issued TCVN (Vietnamese Standards) ISO 14067:2020 to provide requirements and guidelines for firms to quantify and report their carbon footprint (CFP). These standards are in line with the UNGC’s Sustainable Development Goal 13, showing Vietnam’s commitment to tackling climate change, bolstering national energy security, and encouraging sustainable practices among businesses.
Since the standards were issued, Vietnam has made pledges to achieve net zero carbon emissions by 2050, making them all the more important. These actions can enhance Vietnam’s competitiveness and propel it towards sustainable growth in international carbon markets.
What’s in the TCVN ISO 14067:2000?
The details of the requirements and guidelines for the quantification of CFP unveiled within TCVN ISO 14067:2000 can be summarized as follows:
- The national standard provides more than 10 guiding principles for the assessment of GHG or the quantification of CFP or partial CFP, which serve as the foundation to meet other requirements in the standard.
- Organizations must ensure they satisfy the data quality requirements in their CFP study report, which utilizes both quantitative and qualitative approaches.
- The ISO standards require organizations to conduct a life cycle inventory analysis (LCI) for CFP, instructing firms to synthesize and quantify the inputs and outputs for a product throughout its life cycle.
- The CFP study report set out a list of 20 different requirements that organizations need to complete, in which the results, CFP calculations, data, methodologies, and life-cycle interpretation are clearly defined.
What firms need to do to get certified
To get certified, firms need to produce a CFP study. As per Clause 7.3, the ISO standard sets out key information for CFP quantification that should be included. It has over 20 requirements that firms need to complete to be accredited with the ISO 14067:2020 certification. The process can be simplified into five key steps, according to independent certification partner BM Certification:
- Clarify the scope: Establish the boundaries of the assessment, such as the product being assessed, GHG emissions that are taken into account in different categories, the stage of the product’s life cycle to be considered, and the methodology to calculate the carbon footprint.
- Collect data for carbon reporting: Gather the required data to calculate the carbon footprint, such as energy usage, inputs for raw materials, transportation, and waste production.
- Conduct the carbon footprint analysis and life cycle assessment: Use the methodology and formulas outlined in TCVN ISO 14067:2020 to calculate the carbon footprint or GHG emissions in the product’s life cycle.
- Verify the results: Ensure data quality meets the requirements outlined in the TCVNs.
- Communicate the results: Share the verified CFP with relevant stakeholders and communicate the product’s environmental performance.
How will this benefit business and investment?
By adopting International Sustainability Standards such as those of the ISO, Vietnam is taking a proactive approach towards greener growth, which will help mitigate climate change risks and support a low-carbon economy.
The ISO 14067 is anticipated to benefit a wide range of stakeholders, from the Vietnamese government, local organizations, and domestic markets to foreign investors, multinational firms, and global service providers. This ISO standard is in accordance with changing stakeholder demands, providing accurate and transparent sustainability reporting of the product or project.
Therefore, achieving a verified CFP is a prominent step in reaching environmental, social, and corporate governance (ESG) goals, especially in a context where investors are getting serious about sustainability.
In addition, given the ISO 14067 standard is the only certification that specifically pertains to products instead of the entire management system, companies are seeking to acquire the accreditation to gain a competitive advantage in the market.
Customers are increasingly looking for lower-carbon products and expect organizations to implement strategies to lower GHG emissions. Verification of CFP from recognized sustainability standards, therefore, will be of importance in driving brand value and achieving better performance in the Vietnamese market.
The net zero imperative
Vietnam’s GDP is at risk due to sustainability transitions, according to research by McKinsey.
Vietnam’s high-carbon sectors contribute largely to the country’s overall GDP, and a sizable amount of its capital stock is invested in fossil fuel-based electricity. The research further points out that carbon emissions could experience a fourfold increase by 2050 if Vietnam does not implement well-designed decarbonization strategies across all sectors.
Achieving net zero goals, thus, is the new business imperative. The Vietnamese government is taking the first steps in turning pledges into action.
Apart from the carbon emission reduction policies, the government has also issued the Power Development Plan 8 (PDP8), which was approved by the government in 2023. The Plan highlights the shift away from fossil fuels and maps the future of renewable energy usage in Vietnam. The master plan targets to switch around 75 percent of power generation capacity to renewables by 2030, with gas, wind, and hydropower helping to realize this goal. While these are highly ambitious goals, their actual implementation will likely be tempered by short-term power shortages and the need for economic stability amid several global headwinds.
The implementation of international sustainability standards, such as the guidelines to calculate carbon footprint, demonstrates Vietnam’s commitment to mitigate carbon emissions and encourage voluntary participation from businesses to tackle climate change. As Vietnam is making progress toward decarbonization strategies, the adoption of ISO standards will help the country gain a competitive advantage and clear the sustainability pathway for the years ahead.
Although there are many difficulties in managing emissions inventory and allocating carbon emission quotas, firms can expect strong growth in their ESG performance and gain competitiveness in the global market by utilizing these ISO standards.
These efforts will further become necessary as key export markets, like the European Union, establish green market entry requirements, effectively raising the sustainability thresholds of important Vietnam industries, most prominently textiles.
Vietnam Briefing is published by Asia Briefing, a subsidiary of Dezan Shira & Associates. We produce material for foreign investors throughout Eurasia, including ASEAN, China, India, Indonesia, Russia & the Silk Road. For editorial matters please contact us here and for a complimentary subscription to our products, please click here.
Dezan Shira & Associates provide business intelligence, due diligence, legal, tax and advisory services throughout the Vietnam and the Asian region. We maintain offices in Hanoi and Ho Chi Minh City, as well as throughout China, South-East Asia, India, and Russia. For assistance with investments into Vietnam please contact us at firstname.lastname@example.org or visit us at www.dezshira.com
- Previous Article Hanoi Investment Profile: Key Performance Metrics
- Next Article US President to Visit Vietnam September 10